Canada: Key Areas Of Focus For The 2019 Proxy Season


Over the course of 2018, securities regulators, including the Canadian Securities Administrators (CSA) and the Ontario Securities Commission (OSC), published various revisions and clarifications with respect to their guidance regarding disclosure rules for reporting issuers. In addition, proxy advisory firms Institutional Shareholder Services Inc. (ISS) and Glass Lewis & Co. (Glass Lewis), and relevant organizations such as the Canadian Coalition for Good Governance (CCGG), published their respective annual guidelines which provide guidance on best practices for disclosure and corporate governance for the upcoming proxy season.

This Update provides a high level overview of the key areas of focus for these regulators and organizations, which we encourage reporting issuers to keep in mind for the 2019 proxy season. We have concurrently prepared a more comprehensive Memorandum describing the relevant updates to disclosure rules and guidance. For a copy of the Memorandum, please click here.

Environmental and Social Responsibility Disclosure

Currently, securities legislation in Canada requires disclosure of certain climate change-related information in an issuer's regulatory filings, if such information is material. Issuers should expect increased scrutiny and review by the CSA and OSC of their environmental and social (E&S) disclosure in the upcoming proxy season. The CSA found that many of the issuers who disclose general climate change risks do not disclose risks sufficiently specific to the issuer and its operations or fail to disclose the potential impact resulting from climate change. When assessing the materiality of climate change-related risks and impacts, issuers should consider a wide range of risks, including physical (acute/chronic), regulatory, reputational and business model risks.

Both ISS and Glass Lewis will consider oversight issues concerning E&S risks in their case-by-case analyses of issuers. For further details on the ISS and Glass Lewis policies, refer to our November 21, 2018 Update, ISS Releases 2019 Proxy Voting Guidelines Updates for Canada and our December 6, 2018 Update, Glass Lewis Releases 2019 Canadian Proxy Voting Guidelines. See also the ISS 2019 Americas Proxy Voting Guidelines Updates and the Glass Lewis 2019 Proxy Paper Guidelines Canada.

CCGG's newly published Directors' E&S Guidebook and 2018 Best Practices for Proxy Circular Disclosure annual guide are useful resources for recommendations on effective board oversight and disclosure of E&S matters. See The Directors' E&S Guidebook and 2018 Best Practices for Proxy Circular Disclosure.


Issuers should expect their diversity disclosure to continue to be subject to scrutiny and review by the CSA and OSC in 2019. In 2014, the CSA implemented its "comply or explain" regime, requiring Toronto Stock Exchange (TSX) listed issuers to include, among other things, certain gender diversity information in their corporate governance disclosure. While no changes to the current gender diversity disclosure requirements have been proposed at this time, the CSA is considering whether changes are warranted.

ISS expanded its current board gender diversity policy for the 2019 proxy season to apply to "widely-held" companies, which includes S&P/TSX Composite Index companies and companies which ISS designates as such based on the number of ISS clients holding securities of the company. Glass Lewis' previously announced board gender diversity policy takes effect in the 2019 proxy season under which Glass Lewis will generally recommend voting against the nominating committee chair (and potentially other nominating committee members) if: (i) the board has no female members, or (ii) the board has not adopted a formal written gender diversity policy.

Non-GAAP Financial Measures

For several years now, the CSA have expressed concern regarding the use of non-generally accepted accounting principles (GAAP) financial measures. In late 2018, the CSA published a notice and request for comment in respect of proposed National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure (the "Proposed Non-GAAP Instrument") and Companion Policy 52-112CP (the "Proposed Non-GAAP Companion Policy") regarding disclosure requirements for non-GAAP financial measures. The Proposed Non-GAAP Instrument would apply to all issuers other than "SEC foreign issuers". The rules in the Proposed Non-GAAP Instrument, as currently drafted, are broad and would apply to non-GAAP financial measures and other financial measures included in documents intended to be, or reasonably likely to be, made available to the public (regardless of whether those documents have been filed under securities legislation). The Proposed Non-GAAP Instrument and Proposed Non-GAAP Companion Policy, if implemented, will have the force of law and provide the CSA with a much stronger tool to take regulatory action to enforce compliance where warranted. For further details, refer to our September 25, 2018 Update, Canadian Securities Regulators Introduce New Rules for Disclosure of Non-GAAP Financial Measures.

Other Key Updates

  • Forward-Looking Information. The CSA believes disclosure of forward-looking information is often deficient and reminds issuers that they must not disclose a financial outlook unless it is based on assumptions that are reasonable in the circumstances. The OSC cites certain best practices it expects from issuers with respect to disclosure of forward-looking information, including to: (i) clearly identify forward-looking information; (ii) adequately describe the key assumptions used and disclose assumptions specific to the issuer; and (iii) provide reasonable qualitative and quantitative assumptions to support forward-looking information for multiple years. The Proposed Non-GAAP Instrument may also impact disclosure practices with respect to financial outlook once implemented.
  • Social Media. The CSA reminds issuers not to provide material information on their social media sites before it is generally disclosed to all investors, or to provide misleading or unbalanced information inconsistent with information already posted on SEDAR. The CSA suggests issuers should have a robust social media governance policy that specifies, among other things, who is authorized to post what type of information on which social media platforms.
  • Director Election Matters. ISS moved forward with previously announced changes to its director overboarding policy, which increase the thresholds of an overboarded director to: (i) a CEO of a public company who sits on more than two (previously one) outside public company boards; and (ii) a director who is not a CEO of a public company and sits on more than five (previously four) public company boards. The new policy also removes the attendance factor from ISS' considerations. Glass Lewis' analysis of director elections for S&P/TSX 60 Index companies will now include board skills matrices to assist in determining the board's skills and identifying any potential gaps.
  • Executive Compensation. Glass Lewis updated certain evaluation criteria that will apply in its reviews of executive compensation for the 2019 season, including with respect to: (i) contractual payments and arrangements; (ii) grants of front-loaded awards; and (iii) clawback provisions.
  • Virtual Shareholder Meetings. Glass Lewis' previously announced policy regarding virtual-only shareholder meetings is now in effect for the 2019 proxy season. Under the new policy, Glass Lewis may recommend voting against members of the corporate governance committee if the board holds a virtual-only shareholder meeting and the company does not provide disclosure in its proxy circular assuring that shareholders will be afforded the same rights and opportunities to participate in the meeting as they would have in person.
  • Legislative Amendments. On May 1, 2018, Bill C-25 An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act, and the Competition Act (the "CBCA Amendment Act") received royal assent. The CBCA Amendment Act contains, among other things, significant amendments to the Canada Business Corporations Act related to director elections, notice-and-access and diversity disclosure. It is anticipated these amendments will come into force once related regulations are enacted, which could occur as early as the end of 2019.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions